Global central bankers have issued a striking and unusual public statement defending U.S. Federal Reserve Chair Jerome Powell following the launch of a criminal investigation into the Fed chief over the $2.5 billion renovation of the central bank’s Washington, D.C., headquarters and his related testimony to Congress.
The move has sent ripples through financial markets and underscored the ongoing tension between monetary policy independence and political pressures in the United States.
In the joint statement, central bank leaders, including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, said, “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell.”
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The statement emphasized that the independence of central banks is “a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” adding that preserving that independence is essential “with full respect for the rule of law and democratic accountability.”
Powell was personally lauded for his integrity, focus, and “unwavering commitment to the public interest.” The statement noted, “To us, he is a respected colleague who is held in the highest regard by all who have worked with him.”
Other signatories included central bank leaders from Brazil, Switzerland, Sweden, Denmark, South Korea, Australia, and Canada, signaling broad international support for the U.S. Fed chief at a time when his leadership is under scrutiny domestically.
The investigation follows Powell’s testimony to Congress on the Fed’s interest rate decisions, amid sustained pressure from President Donald Trump to cut rates more aggressively to stimulate the economy.
In a video statement posted on the Fed’s X account, Powell framed the investigation as politically motivated, warning that it could have lasting implications for the independence of the Federal Reserve.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation,” he said.
Economists noted that a criminal probe into a sitting central bank chair is highly unusual, raising questions about how monetary policy decisions may be influenced by political interference. Markets have responded cautiously, given that any perceived compromise of Fed independence could alter investor expectations for interest rates, inflation, and U.S. financial stability.
The international backing of Powell is also symbolically significant. Anna Müller, senior economist at the Institute for Global Finance, said, “Central banks around the world rarely comment on domestic political matters in another country. The statement sends a strong signal that the independence of central banks is not just a U.S. concern — it is a global priority. Undermining this principle in a major economy could have ripple effects across global financial markets.”
The Fed is scheduled to hold several rate-setting meetings in the coming months, and Powell’s guidance is closely watched by markets navigating ongoing inflationary pressures and geopolitical risks. Analysts warn that if political interference begins to shape monetary policy, it could undermine investor confidence in the Fed’s ability to act as an impartial arbiter of U.S. economic stability.
Some experts highlight that this situation could embolden political actors in other countries to challenge central bank independence, potentially destabilizing global financial norms.
“This is not just about Jerome Powell. It’s about precedent. Central bank independence is critical for global markets. If it is perceived as vulnerable to political attacks in the U.S., it could lead to pressure on central banks elsewhere, creating broader financial instability,” Professor Michael Carstens, a monetary policy specialist at Georgetown University, commented.
The criminal investigation itself is still in the early stages, and no charges have been filed. Powell continues to carry out his duties, including overseeing monetary policy and interest rate decisions, while under intense scrutiny. Analysts note that the resolution of this investigation will likely influence how central bank leaders around the world approach politically sensitive policy decisions.
Beyond its immediate impact, the case is being watched as a potential test of the resilience of institutional norms in the U.S. Financial markets, policymakers, and economists are all weighing the possibility that political motivations could shape not only domestic monetary policy but also investor confidence and the broader perception of U.S. financial governance on the global stage.